Tablets May Be Hurting Hard Drive Makers (AAPL, WDC, STX, QTM, SNDK, NTAP, EMC)

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DATA STORAGE INVESTING IDEAS

• Popular long ideas: EMC, SNDK, STX
• Popular short ideas: SNDK, WDC, STEC
• Top dividend plays: STX, XRTX, WDC
• Pro favorites: EMC, SNDK, WDC

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DATA STORAGE COVERAGE

Billions of gigabytes of data are saved using the hard drives and storage solutions provided by these firms

• Analysts Hammer STEC Following Weak Guidance (STEC, OCZ, FIO, EMC, NTAP, STX, WDC)
• SanDisk, Western Digital Lift Data Storage Stocks (SNDK, WDC, STX, EMC, STEC, NTAP, OCZ)
• Seagate Slammed By Margin Concerns, Rare Earths Prices (STX, WDC, OCZ, EMC, NTAP, SNDK, STEC, MCP)

DATA STORAGE CHART

DATA STORAGE METRICS

Avg. Market Cap:	$6.6B
Avg. P/E Ratio:	17.0
Avg. Div Yield:	0.5%

Data storage stocks are getting rocked today as signs continue to emerge that booming demand for tablet devices such as Apple’s (AAPL) iPad is not the best of news for the data storage sector. Earnings reports this week from rivals Western Digital (WDC) and Seagate Technology (STX) illustrate the risks tablets currently pose to the data storage space, a fact highlighted by Seagate’s report that fiscal second-quarter results tumbled by 72% due to slack demand for hard drives.

The company reported after the close of U.S. markets on Wednesday and the Data Storage Stocks Index is responding with a 2.9% slide today. Seagate is lower by 7% while Western Digital is off by 5%. Making matters worse, Seagate’s fiscal third-quarter guidance was tepid with gross margins and revenue below analysts’ forecasts.

The iPad is “elephant in the room” for hard drive makers, according to ZDNet, which says more corporate customers are using the tablet device, meaning fewer laptops are being used, weakening demand for hard drives along the way.

Weakness in the data storage space is widespread today with every Index member currently in the red. Quantum Corp (QTM) is the next worst performer after Seagate with a loss of 6%. SanDisk (SNDK) and NetApp (NTAP) are both down over 3% while EMC (EMC), the largest provider of data storage services, is down 3%.

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Tags: AAPL, EMC, NTAP, QTM, SNDK, STX, WDC